HAYAT KIMYA PAKISTAN (PRIVATE) LIMITED vs FEDERATION OF PAKISTAN through Secretary Ministry of Finance S

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HAYAT KIMYA PAKISTAN (PRIVATE) LIMITED VS FEDERATION OF PAKISTAN through Secretary Ministry of Finance S. 19---Sales Tax Act (VII of 1990), S.13(2)(a)---SRO No 41(I)/2009 dated 19.01.2009---Firefighting and lighting equipment---Whether they fall within definition of machinery---Capital equipment---Scope---Claimed exemption from customs duty and sales tax for imported consignments consisting of firefighting and lightning equipment ('goods-in-question') under SRO No 41(I)/2009 dated 19.01.2009 ('SRO 41') was denied by the Customs Department on the view that good-in-question did not fall in the definition of machinery----Plea of the Respondents/Collectorate being that the FBR vide its relevant letter dated 14.12.2018 ('letter-in-question') had endorsed the view point of the Respondent-Collectorate---Validity---Record (including letter-in-question ) revealed that the FBR had not by itself decided the issue independently, but had merely endorsed the view of the Collectorate, which had been treated as decision of FBR as well---Reading the opinion of Collectorate / FBR in juxtaposition with the preamble of the SRO 41, it seemed that the contention of respondents was legally incorrect as the SRO 41 provided that capital equipment (plant, machinery, equipment and accessories-emphasis supplied), if not manufactured locally, shall be exempt from the whole of customs-duty and sales tax if imported for the development of projects in the Special Industrial and Economic Zones for establishing projects in these Zones, subject to certain conditions---Un-disputably, the goods-in-question were not being manufactured locally, nor it was in dispute that the petitioner had set up a project in the Special Industrial Zone---From perusal of the preamble of the SRO, it appeared that the exemption was available on capital equipment which had then been defined / elaborated in parentheses as plant, machinery, equipment and accessories, whereas, in the explanation to Notification, it was only “machinery” which had been defined and not capital equipment---Notably, the exemption was not restricted to “machinery” only---In fact, the exemption was for all sorts of capital equipment which could be plant, machinery, equipment and accessories as well---Machinery, in SRO 41, was one of the capital equipment in addition to plant, equipment and accessories--- These three items had not been defined or explained like machinery, therefore, the restriction in respect of exemption was only on machinery for which such stipulated conditions were applicable and not in respect of the remaining capital equipment---The goods-in-question were equipment and not machinery and the product-in-question fell within the definition of equipment---Even, in SRO No. 41 there was no definition of plant, equipment and accessories---The goods-in-question were equipment and were independently covered for exemption as being capital equipment---For these reasons, High Court was unable to agree with the interpretation of the Respondent-Collectorate/FBR for denying exemption to the petitioner under the SRO 41---High Court declared that the firefighting equipment as well as lighting equipment fell within the definition of capital equipment under SRO 41 and therefore, was entitled for exemption from customs duties as well as sales tax as provided therein---Impugned Notice dated 21.12.2019 as well as letters dated 14.12.2018 issued by Respondent / Collectorate duly endorsed FBR by confirming the said opinion were set aside; and the Bank Guarantees furnished by the petitioner stood discharged accordingly---Constitutional petition, filed by importer, was allowed.

HAYAT KIMYA PAKISTAN (PRIVATE) LIMITED vs FEDERATION OF PAKISTAN through Secretary Ministry of Finance S — 2025 PTD 1824 KARACHI-HIGH-COURT-SINDH

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